Insurance and Asset Protection for an ADU

[Kevin H.]

Hello, I hope you are doing well.

I wanted to ask a couple questions from the perspective of a CA resident.

Let's say someone owns a primary residence, and is in the process of building an ADU on that same plot of land. The ADU will have its own address and separate gas/electric meters, etc. I was wondering how an ADU is looked at in terms of insurance and asset protection?

A couple questions to help guide discussion:

1) Would the ADU be considered an "investment property" or an extension of personal primary residence?

2) Regarding insurance: would the owner then have a homeowner's policy for the original primary residence house, and then a landlord insurance policy (and subsequently landlord umbrella insurance) on the ADU? or would the ADU be added onto the primary homeowner's policy?

3) Regarding asset protection: would the ADU be eligible to be put into a land trust and then moved into an LLC?

Just wanted be prepared with action steps after the ADU gets built. I know a lot of people (especially in CA) are building ADUs to help with the housing problems. They're becoming more prevalent now so hopefully this post can help others too.

Thanks in advance and stay safe everyone!